Uganda considers review of power sector as Eskom exit looms large
Under the deal, Eskom was to inject $100 million into the assets over the 20 year concession period but Eskom Uganda managing director Thozama Gangi admitted, when he appeared before parliament on March 1, that his company had invested only $25 million in the plants five years to the end of the concession.
Mr Gangi said $4 million has been approved for investment in the plants this year while another $26 million would come in over the next three years.
Dr Kefa Kiwanuka, who chairs the committee, wondered why Eskom was only rushing to invest in the plants towards the end of the concession and whether the project has the capacity to absorb the money in the remaining time.
“A power station of Nalubaale’s age needs major refurbishments every seven to 10 years. Uganda Electricity Board did the last of such refurbishments more than two decades ago. Eskom has done no works of that scope during its 15 years at the station,” Mutikanga told the committee.
Eskom reckons the plants can still operate at optimal capacity subject to securing water release permits but the MPs found that some generation units have been down for more than five years.
The extensive cracks in the walls and stairways of the powerhouse at Nalubaale remain because, in Eskom’s estimation, solutions such as anchoring which were employed by the defunct Uganda Electricity Board are ineffective.
“Mechanical interventions are of little value in this case because studies have shown that the cracking in the walls of the powerhouse was caused by alkaline silicate reaction, which is a chemical reaction,” Mr Gangi told the committee.
The House committee objected to the fact that money went to paying consultants who did not add any value to the operation yet Eskom was comfortable with the expenditure.
In spite of low offtake, which restricts Eskom to supplying just 38 per cent of power dispatches, its low tariff is used to dampen the impact of the 8 cents at which the privately-run Bujagali power station and a number of thermal and co-generation projects run by sugar millers inject power into the grid.
“The choices are stark. We either decide to invest in the extension of Nalubaale’s lifespan for another 30 years or decommission it in a decade. That would mean losing the moderating influence of this cheap source of power on the final tariff,” Mr Mutikanga said.